All Forum Posts by: Deanna Sapp

I'm at the point of closing on a duplex that  I'm purchasing with a renovation loan (which has a 6 month timeline to complete the renovations). I've been renting one side & will become the owner. The renter on the other side is a very long term renter, low income, on a month to month lease. They know this is coming and have expressed willingness to move but also some insecurity regarding where they will go. They paid the current owners late this month but did pay, so their lease is up with month end on Oct 31. The 30 day notice window would start Nov 1 and end Nov 30.

Questions:

1) I have them sign a lease for the month of November, correct?

2) Concurrently with the lease I give them 30 day notice?

3) Concurrently do I offer cash for keys to move out earlier?

I am a bit concerned that they'll drag their feet, and worst case scenario it ends up being an eviction that also negatively impacts the reno timeline required by the contract.

@David D'Errico that is exactly what I need. I've been going the Homestyle route for an owner-occupied duplex, which has been a six month headache & contracts aren't even signed yet. I'm new to these forums & not sure if it's OK to share, but if so, I'd like to know which bank you worked with in case they cover my area in Indiana.

Is it possible to do a cash purchase, followed by a HELOC then a cash-out refi? I have looked into delayed financing for cash-out refi under 6 months and would not meet the criteria for that (nor would the loan based on purchase price be enough to complete the reno), so if I do a cash purchase, I am looking at a least a 6 month wait for a home equity loan.

Purchase price - 80k (20k goes back to me as member of LLC, so true price is 60k). Rehab - 125k. Current rent on unit #2 is $525, estimate this would go to $1300 once renovations are complete.

More details: I am in the process of purchasing an owner-occupied duplex (I am also a 25% member of the LLC selling the duplex, and currently living on one side of the duplex). I went the Homestyle renovation loan route, but it's taken 6 months to work things out between the LLC members, the contractor & the bank & the HUD inspector & the appraiser. Now that everything is lined up, I'm looking at a construction bid that's gone up 25% (from 100k to 125k) and bank loan that's gone from around 40k cash down to 52k cash down and monthly payment from 1180 to 1370.

I am having doubts that this is the best route to go, in spite of time & money already invested in this path.

I am considering paying cash to purchase, then either waiting 6 months for a cash out refi home equity loan to do the rehab or (wondering) if it's possible to get the rehab started with a HELOC right after purchase, then 6 months down the road take a home equity loan to pay off the HELOC (with higher appraisal) & finish the remaining rehab work with the loan.

Benefits I see of not going the Homestyle route are: lower rehab costs due to more options in contractors & less stringent lead paint removal without HUD being involved (property was built in 1914), possibly lower interest rate without a Homestyle loan but weighing that against likelihood that rates will raise anyway 6 months down the road, and more flexibility on timeline to complete.

I intend to rehab & rent the other unit for at least 5 years, then may decide to convert the duplex into 2 separate titled properties, sell the other one & pay off the remaining loan.